Super Retail Group sales growth highlights split within retail sectors

Super Retail Group’s announcement of further sales growth indicates a significant divide within the retail industry, experts say, with some sectors doing surprisingly well despite low consumer confidence overall.

The results come just a day after Harvey Norman revealed its profit in the first quarter had fallen 25% as margins continue to erode, especially in the technology sector where prices for flat panel televisions and other electronics are on the decline.

Deloitte partner David Rumbens says while consumer spending as a whole is poor, it would be wrong to say some sectors aren’t performing well.

“Certainly we’re seeing areas like food sales are holding up better than non-food areas, but then again, the areas that have lost the most market share to online have been booksellers, electronic sellers and clothing retailers,” Rumbens says.

“Obviously the more exposed you are to the internet, the more your sales are going to be affected.”

There are still opportunities for smart retailers, experts say. Super Retail Group announced yesterday it had maintained like-for-like sales growth across all divisions during the past 17 weeks of trading.

Like-for-like sales in the 17 weeks to April 28 were up 3% in automotive and cycling, 2.3% in leisure and 3% in sports. The company is also expected to announce its profits have increased as much as 70%.

“Although our growth has slowed since the first half, our performance is particularly creditable given the very strong like-for-like sales growth experienced in the comparable period when Supercheap Auto delivered 6.7% and BCF [boating, camping and fishing] delivered 10.6%,” Super Retail Group chief executive Peter Birtles told the Australian Financial Review.

SmartCompany contacted Birtles this morning, but no reply was available prior to publication.

The company’s shares hit a record of $7.84 after the announcement.

In contrast, Harvey Norman recorded a profit decline of 25% in the third quarter. Its shares promptly fell 5%.

Deloitte partner David Rumbens says this is the nature of retail, as the structural shift towards internet selling means some sectors are exposed while others thrive.

“We’re seeing a bigger divergence between retail performance and the sales of underlying products in some areas, so the more exposed you are, it makes sense that you’re not performing as well.”

“That’s not to say individual company performance is a factor, it clearly is, but the environment is certainly not uniform across all these products.”

“It’s reasonably weak all around, but in terms of exposure, that certainly differs on a case-by-case basis.”

The divide is shown within Harvey Norman’s own results. Although like-for-like sales fell by 6.6% in the year prior to March 31, the company said its appliances, whitegoods and furniture and bedding sales all performed “steady” or “solidly”.

The technology division, however, continues to perform poorly. As Rumbens points out, this is as much an industry issue as it is an individual company problem.

“Harvey Norman has an exposure to electronics, but it’s largely in furniture and whitegoods. Super Retail Group controls other areas like automotive, which is less exposed to online.

“It differs between sectors.”